Maine Granted Waiver of Key Provision of Health Care Law

March 9, 2011 (PLANSPONSOR.com) - The federal government has granted Maine a waiver of a key provision in the federal health care overhaul, citing the likelihood that enforcement could destabilize the state's market for individual health insurance.

The Associated Press reports that the U.S. Health and Human Services department said in a letter it will waive the requirement that insurers spend 80 cents to 85 cents of every premium dollar on medical care and quality improvement. The state can maintain its 65 percent standard for three years, with the caveat that HHS intends to review the figures after two years.

Similar requests are pending from Kentucky, Nevada, and New Hampshire, the AP said.

According to the news report, in seeking the waiver, Maine Insurance Superintendent Mila Kofman expressed concern that one of three major insurers offering individual plans in Maine would withdraw from the market altogether if the federal requirement remained in place. The insurer, MEGA Life and Health Insurance Co., has 37% of the state’s individual market.

MEGA’s departure from the market would carry the “reasonable likelihood of destabilizing the Maine individual market,” with costly ramifications for MEGA’s policyholders, wrote Steven Larsen, an HHS deputy administrator, according to the AP.

The Patient Protection and Affordable Care Act allows states to petition to delay until 2014 the federal standard on how much money from premiums must go to medical care for the individual market.